Google Becomes Alphabet, And Alphabet Assimilates Google
A Google by any other name is, well, maybe just a little less-complicated a business.
In a surprise move that has the tech world scratching its head, Google co-founder Larry Page revealed Monday a major operational restructuring that involves the creation of a new holding company called Alphabet under which Google's disparate projects will reside as independent subsidiaries.
Page, who identified himself in the letter as the CEO of Alphabet, told investors the reorganization will make Google's overall business "cleaner and more accountable" as unrelated divisions find greater independence. Co-founder Sergey Brin will be Alphabet's first president.
And Sundar Pichai, a 43-year-old product whiz who headed Google's Chrome and Apps divisions, will formally become CEO of Alphabet's largest subsidiary -- Google.
But it won't be exactly the same Google.
"What is Alphabet? Alphabet is mostly a collection of companies. The largest of which, of course, is Google," Page wrote. "This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main internet products contained in Alphabet instead."
Those companies include many of Google's famed side projects, exploratory ventures and moonshots.
Among them, two ventures into health tech -- Life Sciences and Calico, working on smart contact lenses and longevity research, respectively. Also Google X, which works on Google's high-tech moonshots, like self-driving cars.
Page also said the two founders are "stoked" about taking advantage of the new structure to grow their investment divisions, Google Ventures and Google Capital.
According to a filing announcing the new corporate structure to the SEC, Nest Labs, developer of home-automation technologies, and Fiber, Google's ISP, will also become independent Alphabet subsidiaries.
But Google will remain the brand for the company's most-recognized products: search, ads, apps, maps, YouTube and Android. Neither Page's letter nor the SEC filing mentioned Cloud Platform, but it seems a safe bet that will also remain a division within Pichai's realm.
The SEC filing also says that Omid Kordestani, a 16-year Google veteran, will no longer serve as the company’s chief business officer. Kordestani will ’transition from his role … to become an Advisor to Alphabet and Google.’
All Google shares, with all the same rights, will transfer to Alphabet. Even the company's two NASDAQ tickers will remain the same.
So what's the point?
Well, for starters, Google is unconventional, Page made sure to point out. And sometimes you just need to shake things up.
"We’ve long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes. But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant," Page said.
And while the two co-founders like the name Alphabet, because after all, letters are important, consumers, business customers and partners shouldn't expect to hear that name too often.
"I should add that we are not intending for this to be a big consumer brand with related products -- the whole point is that Alphabet companies should have independence and develop their own brands," Page said.
Rajesh Abhyankar, CEO of New Jersey-based Google premier partner MediaAgility, said he's still digesting the details of Google's announcement, but believes it marks an exciting new chapter for Google.
Learning the news at 4 a.m. in India, Abhyankar said the news kept him awake.
"Taking X Labs out and handing the reins of a slimmer, more-focused Google to Sundar as the CEO is great news for the Google for Work partner ecosystem," Abhyankar told CRN via email. "As a product person, we expect Sundar to be absolutely focused on the core Google platforms as well as the enterprise customer."
Abhyankar said the restructuring addresses concerns of some in Google's partner ecosystem about a perceived lack of focus stemming from diverse products like the self-driving car, or same-day express delivery service.
"We are keeping a close eye as more details emerge and a lot more questions [are] answered about Alphabet," he told CRN.
Investors seemed to approve of Alphabet and all it represents.
Google shares, which closed Monday at around $633, advanced in after-hours trading, peaking at $680 before settling around the $670 mark.
PUBLISHED AUG. 10, 2015